‘This bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,’ argued Bernie Sanders
Update (9:53 PM EST):
The Republican-controlled U.S. House of Representatives passed a controversial spending bill late on Thursday night with a final vote of 219 to 206.
139 Democrats opposed the bill because, as the Huffington Post reports, they “were bitterly opposed to two attached riders that would whittle away at campaign finance rules and roll back provisions in the Dodd Frank Wall Street reform act designed to curb the risky trading at the heart of the 2008 financial crisis.”
The additional ‘Nay’ votes came from 67 Republicans whose opposition centered around their objection to funding contained in the bill that would go towards immigration reform measures recently put forth by the Obama administration.
In a statement opposing the bill ahead of the final vote, Minority Leader Nancy Pelosi, condemned the contents of the rider that will lift the regulations on derivatives trading, saying “This is ransom, this is blackmail. We don’t get a bill unless Wall Street gets its taxpayer-funded coverage.”
Pelosi said the amendment in question, which was literally written by lobbyists with Citigroup (see below), brings back financial services regulation “back to the same old Republican formula: privatize the gain, nationalize the risk. You succeed, it’s in your pocket. You fail, the taxpayer pays the bill. It’s just not right.”
As the Washington Post reported just ahead of the final vote, “The provision was so important to the profits at [the nation’s biggest banks] that J.P.Morgan’s chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort.”
Though progressive lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, put forth spirited arguments against the nefarious provisions in the bill which they described as “giveaways” to Wall Street financiers and the wealthiest Americans, White House spokesperson John Earnest appeared on MSNBC and championed passage of the bill, saying the funding legislation was “the kind of compromise that [President Obama has] been seeking from Republicans for years now.”
According to Agence France-Presse, the bill’s passage came after a “bruising day of arm-twisting by the White House” directed at Democrats who opposed the bill.
Negative reactions from progressives on Twitter ensued:
Find the complete roll call here.
Despite enthusiastic backing from the White House, the $1.1 trillion government spending bill that opponents have described as “a Wall Street giveaway” is on thin ice on Thursday, facing strong opposition from progressive lawmakers and watchdog groups.
According to The Hill, the bill’s prospects “appeared to be teetering Thursday after House Democratic Leader Nancy Pelosi (Calif.) announced her opposition and the package narrowly survived a procedural vote.”
The House went into recess shortly after 2 p.m. after the debate on the bill had concluded, “something that could signal GOP leaders aren’t sure they have the votes necessary to pass the bill,” The Hill reported. “During a debate on a border measure last summer, Republicans also went into recess and then pulled the bill from consideration. But GOP aides insisted on Thursday the spending bill would go forward.”
At the center of the dispute is a provision, inserted at the last minute by Congressional Republicans, that would relax the regulation of investments known as derivatives. Democrats have demanded that the provision be removed, arguing that would weaken protections that keep the U.S. economy safe, allow big banks gamble with depositors’ federally insured money, and increase the likelihood that floundering banks would get another taxpayer bailout.
While White House press secretary Josh Earnest called the bill “a compromise” that “does fulfill some of the many of the top line priorities that the president himself has long identified,” opponents claim the bill was “literally written by Citigroup lobbyists,” as Senator Elizabeth Warren (D-Mass.) wrote on her website.
On the Senate floor on Wednesday, Warren chided her fellow lawmakers: “Who do you work for, Wall Street or the American people?” she asked. “Nobody sent us here to stand up for Citigroup. It is time for all of us to stand up and fight.”
In remarks he shared with The Hill, Senator Bernie Sanders (I-Vt.) echoed Warren’s rallying cry.
“Instead of cracking down on Wall Street CEOs who plunged the country into a terrible recession, this bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,” he said.
It’s no wonder Warren referred to the bill as a giveaway “for the rich and powerful,” declared Mary Bottari, director of the Center for Media and Democracy.
The measure is backed not just by Citi, but by all the too-big-to-fail banks who want to continue business as usual, including JP Morgan Chase, which lost a whopping $7 billion recently in risky derivatives trades. FDIC’s Vice Chair Thomas Heonig, a Republican, explains the real reason the banks want the deal: “Most of these firms have broker-dealer affiliates where they can place these activities, but these affiliates are not as richly subsidized.” In other words, the banks could make a lot more money if they can use taxpayer-backed funds to make risky bets in the derivatives markets.
Marcus Stanley, policy director for nonprofit consumer watchdog group Americans for Financial Reform, puts it more simply: “The bill restores the public subsidy to exotic Wall Street activities.”
This progressive roadblock—the Washington Post described it a “liberal Democrats’ rebellion”—could prove problematic for the GOP, which needs a handful of Democratic votes to make up for members of its own party who oppose the spending package because it does not do more to curtail President Obama’s executive actions on immigration.
The Senate is waiting for the House to take action on a funding measure before determining its own next steps, though it is expected to take up the bill on Friday.
A procedural vote earlier Thursday to advance debate on the spending package was narrowly approved in a 214-212 vote—another sign the bill is on shaky ground.